Latest news with #CIMBSecurities
The Sun
8 hours ago
- Automotive
- The Sun
Auto sector to have minimum impact from SST expansion
KUALA LUMPUR: CIMB Securities Sdn Bhd has projected the upcoming Sales and Service Tax (SST) expansion in July 2025 to have a limited direct impact on the automotive sector. In a research note, it said vehicle sales are already subject to a 10 per cent sales tax, while maintenance and repair services incur an 8.0 per cent service tax. 'That said, there may be a slight increase in dealership and showroom rental costs due to the measure, although we believe the impact will be minimal. 'Indirectly, however, weaker consumer sentiment could weigh on new vehicle sales in the second half of 2025 (2H 2025),' it said. The Malaysian Automotive Association (MAA) has reportedly projected a 4.5 per cent year-on-year (y-o-y) decline in total industry volume (TIV) to 780,000 units in 2025, attributing this to demand normalisation and a reduced industry order backlog. CIMB Securities has, however, forecasted a sharper 7.0 per cent y-o-y decline in TIV to 760,000 units, due to potential headwinds from the planned removal of the RON95 petrol subsidy in 2H 2025, which Prime Minister Datuk Seri Anwar Ibrahim has affirmed will proceed as part of the government's subsidy rationalisation. 'Despite this, we expect demand in the sub-RM100,000 segment to remain resilient, supported by national brands and selective entry-level Japanese models. 'We project national brands to retain a dominant 64.5 per cent market share in 2025, with non-national marques accounting for the remaining 35.5 per cent,' it said. CIMB Securities also believed the removal of fuel subsidies could accelerate battery electric vehicle (BEV) adoption. BEV sales nearly doubled y-o-y in 1Q 2025 to 5,394 units from 2,703 units a year ago, with combined BEV and hybrid penetration rising 1.9 percentage points y-o-y to 7.3 per cent. 'With full duty exemptions for imported electric vehicles (EVs) set to expire by end-2025, and the government unlikely to extend it beyond the Dec 31, 2025 deadline, we expect a potential spike in EV demand in 4Q 2025 as buyers rush to benefit from tax savings,' it said. CIMB Securities has maintained its 'Neutral' rating on the sector due to a subdued growth outlook amid intensifying market competition.
The Sun
9 hours ago
- Automotive
- The Sun
Auto sector to have minimum impact from SST
KUALA LUMPUR: CIMB Securities Sdn Bhd has projected the upcoming Sales and Service Tax (SST) expansion in July 2025 to have a limited direct impact on the automotive sector. In a research note, it said vehicle sales are already subject to a 10 per cent sales tax, while maintenance and repair services incur an 8.0 per cent service tax. 'That said, there may be a slight increase in dealership and showroom rental costs due to the measure, although we believe the impact will be minimal. 'Indirectly, however, weaker consumer sentiment could weigh on new vehicle sales in the second half of 2025 (2H 2025),' it said. The Malaysian Automotive Association (MAA) has reportedly projected a 4.5 per cent year-on-year (y-o-y) decline in total industry volume (TIV) to 780,000 units in 2025, attributing this to demand normalisation and a reduced industry order backlog. CIMB Securities has, however, forecasted a sharper 7.0 per cent y-o-y decline in TIV to 760,000 units, due to potential headwinds from the planned removal of the RON95 petrol subsidy in 2H 2025, which Prime Minister Datuk Seri Anwar Ibrahim has affirmed will proceed as part of the government's subsidy rationalisation. 'Despite this, we expect demand in the sub-RM100,000 segment to remain resilient, supported by national brands and selective entry-level Japanese models. 'We project national brands to retain a dominant 64.5 per cent market share in 2025, with non-national marques accounting for the remaining 35.5 per cent,' it said. CIMB Securities also believed the removal of fuel subsidies could accelerate battery electric vehicle (BEV) adoption. BEV sales nearly doubled y-o-y in 1Q 2025 to 5,394 units from 2,703 units a year ago, with combined BEV and hybrid penetration rising 1.9 percentage points y-o-y to 7.3 per cent. 'With full duty exemptions for imported electric vehicles (EVs) set to expire by end-2025, and the government unlikely to extend it beyond the Dec 31, 2025 deadline, we expect a potential spike in EV demand in 4Q 2025 as buyers rush to benefit from tax savings,' it said. CIMB Securities has maintained its 'Neutral' rating on the sector due to a subdued growth outlook amid intensifying market competition.
New Straits Times
12 hours ago
- Automotive
- New Straits Times
Tax expansion poses limited direct impact on auto sector
KUALA LUMPUR: The upcoming expansion of the service tax scope, effective next month, will have a limited direct impact on Malaysia's automotive sector, according to CIMB Securities Sdn Bhd. The firm said this is because vehicle sales are already subject to a 10 per cent sales tax, while maintenance and repair services incur an eight per cent service tax. "That said, there may be a slight increase in dealership and showroom rental costs due to the measure, although we believe the impact will be minimal. "Indirectly, however, weaker consumer sentiment could weigh on new vehicle sales in the second half of 2025 (2H25)," it added. CIMB Securities also highlighted that the Malaysian Automotive Association has forecast a 4.5 per cent year-on-year (YoY) decline in total industry volume (TIV) to 780,000 units in 2025. This is attributed to demand normalisation and a reduced industry order backlog. The firm said MAA also flagged global economic uncertainty, exacerbated by US-China trade tensions, as a risk to Malaysia's economic outlook. In addition, the government has postponed the implementation of the revised open market value (OMV) calculation from January 2025 to January 2026. CIMB Securities views this delay as a short-term positive for the sector, as the new OMV formula could raise the average selling price of locally assembled vehicles by 10–30 per cent, based on MAA estimates. The firm also expects a sharper seven per cent YoY decline in TIV to 760,000 units, mainly due to potential headwinds such as the planned removal of the RON95 petrol subsidy in 2H25. "Despite this, we expect demand in the sub-RM100,000 segment to remain resilient, supported by national brands and selected entry-level Japanese models. "The government's plan, outlined in Budget 2025, to retain subsidies for at least 85 per cent of RON95 users should help cushion the impact and support affordability in the mass-market segment. "Consequently, we project national brands to retain a dominant 64.5 per cent market share in 2025, with non-national marques accounting for the remaining 35.5 per cent," it said. Furthermore, CIMB Securities believes the removal of fuel subsidies could further accelerate battery electric vehicle adoption. The firm also expects a potential spike in electric vehicle (EV) demand in the fourth quarter of 2025 as buyers rush to benefit from tax savings. Full duty exemptions for imported EVs are set to expire by the end of 2025, and the government is unlikely to extend them beyond the December 31, 2025 deadline. "Within our coverage, Sime Darby Bhd is well-positioned to ride this wave, supported by its expanding EV line-up across brands like BMW, Mini, Porsche, BYD, and Volvo," it said. Overall, CIMB Securities has maintained a "Neutral" rating on the auto sector due to a subdued growth outlook amid intensifying market competition. It noted that Sime Darby remains its top sector pick, supported by earnings recovery in the Australian mining sector, a broad EV portfolio, its stake in Malaysia's auto market leader Perodua, and the potential monetisation of non-core and land bank assets. Moving forward, the firm said key catalysts for the sector include the strengthening of the ringgit against the US dollar and Japanese yen, a reduction in interest rates, and favourable government policies aimed at reviving domestic demand. Key downside risks to its call include depreciation of the ringgit, interest rate hikes, and weaker consumer sentiment stemming from the potential subsidy rationalisation programme and new taxes.
New Straits Times
a day ago
- Business
- New Straits Times
Hong Leong poised to benefit from China associate's share price rally
KUALA LUMPUR: Hong Leong Bank Bhd is set to attract renewed investor interest following the strong performance of its China associate, Bank of Chengdu Co Ltd, whose share price recently surged to a record high despite geopolitical challenges. In a research note, CIMB Securities said Bank of Chengdu's stock hit RMB19.57, up 21.7 per cent from its February low, as market sentiment improved after the finalisation of United States tariffs on China. Hong Leong Bank holds a 17.8 per cent stake in Bank of Chengdu, which remains a key contributor to its earnings. "The risk-reward trade-off for Hong Leong is now tilted to the upside," CIMB Securities said, upgrading its rating on the stock to "buy" from "hold" and raising the target price to RM21.50 from RM21.40. The firm noted that Bank of Chengdu's improving outlook and consensus expectations for a 4.2 per cent year-on-year rise in pre-tax profit for financial year 2026 (FY26) contrast with its earlier conservative estimate of a 5.8 per cent decline. Aligning projections with market consensus could imply a potential target price of RM24.10 for Hong Leong, it said. Despite Bank of Chengdu's positive momentum, Hong Leong's own market capitalisation declined 9.3 per cent to RM42.1 billion since February, partly due to a one-off dilution loss of RM408 million. Of this, RM393 million was linked to the conversion of Bank of Chengdu's convertible bonds. "Hong Leong confirmed that this is a one-off loss," CIMB Securities said, adding that the dilution was caused by Bank of Chengdu's bondholders converting at a lower price, compared with Hong Leong's earlier and more favourable conversion. Bank of Chengdu's contribution to Hong Leong's group pre-tax profit stood at 25.7 per cent in the March quarter, maintaining its critical role in Hong Leong's earnings base. The Chengdu-based lender reported a robust return on equity of 14.8 per cent, with loans and deposits rising 17 per cent and 15 per cent year-on-year, respectively. Asset quality at Bank of Chengdu also remained solid, with a gross impaired loans ratio of just 0.66 per cent and loan loss coverage at 456 per cent. CIMB Securities noted that only six to seven per cent of Bank of Chengdu's loans are linked to the manufacturing sector and are largely domestically focused, making the impact of US tariffs manageable. Meanwhile, Hong Leong's asset quality continued to outperform industry standards. Its gross impaired loans ratio stood at 0.57 per cent as at March, lower than the banking industry's 1.42 per cent. Hong Leong's loan loss coverage dropped to 95 per cent in the third quarter of 2025 from 139 per cent in the previous quarter due to a RM399 million write-back of pre-emptive provisioning. Despite this, the firm said it remains "not overly concerned" as about half of the impaired loans are backed by strong property collateral and the remainder is covered by provisioning at 1.8 times. "Looking ahead, we expect Hong Leong to rebuild its loan loss cover in the coming quarters, consistent with its traditionally conservative credit culture," it said. CIMB Securities also raised its dividend payout forecasts for Hong Leong, projecting yields of 4.5 per cent for FY26 and 5.1 per cent for FY27, driven by improved capital ratios under Basel III. The dividend per share is expected to rise to 88 sen in FY26 and 99 sen in FY27, from 71 sen previously. Key catalysts for Hong Leong include its stable asset quality and higher dividend payouts, while downside risks include potential spikes in credit costs and elevated funding costs. Shares of Hong Leong last traded at RM19.40 apiece, valuing the lender at RM42.05 billion.
The Sun
a day ago
- Business
- The Sun
Ministry initiates urgent discussions with palm oil industry over upcoming 5% SST on oleochemical sector
BANGI: The Ministry of Plantation and Commodities has instructed for an immediate engagement session with palm oil industry players following concerns over the implementation of a five per cent Sales and Service Tax (SST) on the oleochemical sector starting next month. Its Minister, Datuk Seri Johari Abdul Ghani, said that the ministry needs to obtain direct feedback from companies that are genuinely involved in the palm oil industry chain, particularly in the milling, refining, and oleochemical sectors, to determine whether the tax implementation affects the industry's competitiveness. 'I have instructed the ministry to engage with industry players. We want to know specifically which parts are affected. SST is a taxation system that has already been implemented in our country. 'When receiving significant negative feedback, I said we should not just react; instead, we need to engage with the industry to understand the impact. If it affects competitiveness, only then will we review it,' he told the media after officiating the Malaysian Palm Oil Board's Technology Transfer Programme 2025 here today. Johari stated that the ministry would only assess feedback from parties actively involved in the industry, rather than from outsiders who may lack a comprehensive understanding of operational realities and cost structures in the commodity sector. 'Sometimes, people who comment are not even involved in the industry. We need to talk to those on the ground ... who understand things from the milling stage, to refining, up to oleochemicals,' he said. The minister clarified that the export of raw materials is not subject to sales tax. 'Raw materials exported are not subject to sales tax. When people claim the burden is increasing, some may not fully understand the situation. That is why we need to go to the ground and hear directly from them,' Johari emphasised. He also said that no companies have formally applied for SST exemptions so far, and the ministry is open to reviewing reasonable cases if they directly affect the competitiveness of the national palm oil sector. CIMB Securities recently reported that Malaysia's oleochemical sector could face increased input costs starting July 1, as palm kernel oil, previously exempted from the SST, will now be subject to a five per cent sales tax. The firm said the revised tax also applies to refined, bleached, and deodorised (RBD) palm kernel oil and palm kernel shell, which have been reclassified under the expanded SST framework, affecting 4,800 Harmonised System Codes (HS). Every product that is bought, sold or shipped across borders is assigned an HS code. These codes are internationally standardised codes to classify traded products. Earlier in his speech, Johari said that the oleochemical sector accounts for approximately 24 per cent of the export value of Malaysia's palm oil products, amounting to RM27.5 billion in 2024.
